Medicaid: Work requirements and expansion in the offing

December 1, 2017

Susan Ladika

Seema Verma, CMS

The Medicaid program is political putty. Its breadth and depth at any given time are molded by politics (big-picture and the nitty-gritty stuff), attitudes toward health insurance in general, and coverage for poorer Americans in particular.

Next year the program may prove to be more malleable than ever.

CMS administrator Seema Verma is pushing to add work and other requirements for some Medicaid beneficiaries by way of Section 1115 waivers.

Meanwhile, Maine residents voted in November for an ACA-type expansion of Medicaid over the objections of the Republican governor. Campaigns for similar ballot initiatives in Utah and Idaho are gearing up. And the fate of the popular Children’s Health Insurance Program (CHIP) was unknown as we went to press. (Technically, CHIP isn’t part of Medicaid, but they are often grouped together because both extend insurance to low-income Americans.) The House passed legislation in early November that would reauthorize the program for another five years, but most Democrats voted against it because the money came from the ACA’s Prevention and Public Health Fund—another Republican move, say Democrats, to sabotage the ACA.

Status of state action on Medicaid expansion

As of Nov. 8, 2017

Source: Kaiser Family Foundation

Medicaid is both huge and balkanized. It now covers about one in every five Americans, which works out to about 62 million people. That’s a larger slice of the payer pie than Medicare (14%; 45 million people) but considerably smaller than employer-sponsored coverage (49%; 157 million people). Mainly by their design—it’s been a federal-state hybrid since its inception—Medicaid programs vary widely from state to state.

The Kaiser Family Foundation predicts that growth in Medicaid enrollment will slow next year to 1.5% from 2.7% in fiscal year 2017. Even so, total spending is projected to rise by 5.2%, compared with a 3.9% increase in fiscal year 2017. Prescription drug costs and higher payment rates to certain provider groups are among the reasons for the uptick in spending.

Verma made her reputation revamping Indiana’s Medicaid program when Mike Pence was governor. Indiana expanded Medicaid under the ACA but also received a Section 1115 waiver, so it’s not surprising that as CMS administrator Verma is wielding the waivers as a way to reshape Medicaid programs along conservative-Republican lines. The Indiana Medicaid program she designed as a consultant to the state created a tier of Medicaid that pairs high-deductible coverage with a health savings account in pretty much the way commercial insurers do with their high-deductible plans. Other features of the Healthy Indiana Plan, as it is called, required beneficiaries to make “contributions” analogous to premiums and used higher co-pays to discourage inappropriate use of the emergency department.

Early in her tenure in the top job at CMS, Verma signaled an endorsement of work requirements. She and her then boss, Tom Price, mentioned them in an open letter to governors in March. In a speech she gave last month to the National Association of Medicaid Directors, Verma endorsed “community engagement”—work or community service—as a condition for “able-bodied” people to get Medicaid coverage and accused the Obama administration of the “soft bigotry of low expectations” for opposing such a requirement. By some counts, eight states have submitted requests for Section 1115 waivers that would involve imposing some kind of work or service requirement on Medicaid beneficiaries in their states. The new year could bring a flurry of approvals and, at least in those states, a Medicaid version of Bill Clinton’s “end of welfare as we know it.”

Many progressive groups and experts see the work requirements as antithetical to the purpose of the 1115 waivers—and Medicaid more generally. Judy Solomon, vice president for health policy at the Center on Budget and Policy Priorities, a nonpartisan research and policy institute, says the waivers are supposed to be used to increase Medicaid access and coverage. Some of the pending waivers would do the opposite, decreasing participation and making it harder to get care, she says.

Solomon also says the Trump administration “doesn’t think [Medicaid] expansion is consistent with the core mission of Medicaid.”

“It’s not clear if the Trump administration even wants to encourage the conservative version of Medicaid to go forward,” adds Joan Alker, executive director of the Center for Children and Families at the Georgetown University McCourt School of Public Policy.

Yet Medicaid expansion may be gathering momentum that will carry into 2018. Presuming that Republican Gov. Paul LePage’s immediate post-election objections are overcome, Maine will become the 32nd state to expand Medicaid, according to a tally kept by the Kaiser Family Foundation.

In recent years, there has been “a groundswell of efforts in Utah to pass some sort of Medicaid expansion,” says RyLee Curtis, spokeswoman for the pro-expansion Utah Decides Healthcare. In November, CMS approved a waiver for limited expansion in Utah that will provide coverage for up to 6,000 adults, and particularly benefit the homeless. The state will pay about $30 million annually for that limited expansion, while the federal government will pitch in approximately $70 million.

The 2018 ballot initiative would be a vote on full expansion that would cover up to about 100,000 Utahans. It includes a 0.15% sales tax increase. When the expansion is fully implemented in 2021, it would cost Utah taxpayers about $90 million, while drawing in perhaps $800 million in federal funds, Curtis says. The groups that favor Medicaid expansion still need to collect enough signatures to get it on the ballot.

Expansion advocates in Idaho are taking a similar tack. A group called Reclaim Idaho has submitted paperwork to get the ballot initiative on the November 2018 ballot. According to the Kaiser Family Foundation, about 22,000 Idaho residents are in the “coverage gap” that exists in nonexpansion states: people who make too much money to be eligible for the state’s Medicaid program but too little to quality for ACA financial assistance.